AGP Executive Report

Climate Diplomacy: World leaders are set to visit Tuvalu’s main atoll ahead of pre-COP31, spotlighting the existential “two-metre” sea-level threat to one of the lowest-lying nations. Tech Reset in ASEAN: Southeast Asia’s funding correction is pushing investors toward more durable, operations-led tech businesses, with enterprise and industry-focused models gaining traction. Drug Supply Crackdown: INTERPOL’s Operation Lionfish-Mayag IV seized 650 tonnes across Southeast Asia, with ketamine seizures surging and a new maritime cocaine route flagged. Jobs vs Growth: ASEAN GDP is rising, but youth economic security is lagging, with Indonesia and Vietnam showing persistent graduate unemployment pressures. Power Security: An IEA report warns electricity security risks are widening across ASEAN as demand climbs (5.4% yearly to 2030) while LNG/coal reliance and network constraints raise costs. Aviation Connectivity: Qantas and Jetstar seek more Indonesia routes and seats after expanded bilateral air services, adding new Jakarta, Bali and frequency plans. Energy Transition & Industry: Indonesia is pitching up to US$3.8tn in energy-transition investment through 2050, while a new coordinating ministry’s operational budget is sourced from ESDM. Palm Oil Outlook: Analysts expect a 2027 CPO squeeze driven by B50 biofuel policy and El Niño, with supply tightness a key risk for exports. Maritime Safety: Plans are underway to raise the sunken ferry Virgo Transport 8 to recover up to 55 missing passengers/crew. Downstream Push: Indonesia’s downstream industry and energy transition agenda gets budget and governance momentum as the new coordinating ministry takes shape.

Renewables Push: Indonesia has kicked off its 100 GW solar programme, with the first 15 projects already under way and 15 solar power stations to be built across East, Central, West Java, Bali, and parts of Sumatra—aiming to cut fossil dependence and support millions of jobs. Industrial Water & Investment: Global Water Intelligence and Corporate Water Leaders will host an Industrial Water Action Workshop in Jakarta (Nov 16–18) to turn West Java’s water supply and pollution problems into investable projects, with partners including Nike and the Water Resilience Coalition. Halal Compliance Watch: Indonesia’s mandatory halal certification for imported food, cosmetics, medicines, supplements and some medical devices starts Oct 17, raising costs and customs-delay risks for Indian exporters, according to GTRI. Manufacturing Exports: Indonesia’s toy exports hit US$351.8m in Jan–Jun 2026, up from US$297.7m a year earlier, as the industry ministry points to quality upgrades, standardization and market access. Energy Security Under El Niño: The energy ministry says fuel queues during El Niño are driven by river drying that reduces ship transport capacity, forcing smaller tanker-truck loads—not fuel shortages. Trade & Logistics: AkzoNobel agreed to sell its Southeast Asia decorative paints business to Nippon Paint for $1.35bn, with Indonesia closing expected in late 2026. Environment & Risk: El Niño-fueled fires are threatening Bornean orangutan habitats, with experts warning that community-led, long-term action is needed beyond firefighting.

Digital Payments & CBDC: Bank Indonesia is pushing the Digital Rupiah to strengthen Indonesia’s payment rails as QRIS usage surges (65.77m users, 44.86m merchants by June 2026) and transactions nearly double in value year-on-year. Creative Economy & IP: BI also urged stronger copyright protection for East Nusa Tenggara woven motifs to help weavers capture more value and reach wider markets. Agribusiness Biosecurity: Indonesia stepped up anthrax control in Gunungkidul, Yogyakarta, after a case was detected, with investigations, disinfection, vaccination, lab checks and ongoing surveillance. Trade & Industry Policy: The US announced new Section 232 measures on solar polysilicon and derivatives, including a 15% tariff plus minimum import prices—an external shock Indonesia’s solar supply chain will watch closely. Energy Transition & Biofuels: Danantara plans ethanol infrastructure investment over the next three years, aiming to complete the cycle by 2029 to support Indonesia’s energy self-sufficiency push. Maritime & Logistics Rates: Drewry reports intra-Asia container rates rose 2% to $1,518 per 40ft as typhoon disruption and port congestion tighten capacity. Food & Aquaculture Innovation: Research highlights dextrose as a better carbon source for zero-exchange shrimp hatcheries, targeting higher larval survival in biofloc systems.

Earthquake Watch: BMKG reported a M5.9 quake off Southwest Sumba, East Nusa Tenggara, with 62 aftershocks in just over two hours; no tsunami risk, but tremors may last up to weeks. Digital Talent & Security: UI’s data science center is teaming up with Russia’s Positive Technologies to train in AI and cybersecurity, aiming to build practical digital defenses. AI & Data Centers: Singapore’s BDx says it will still target early-2027 service for a 640MW AI data center campus in West Java, despite a halt over pending environmental and building approvals. Trade & Industry: Indonesia targets signing the Indonesia–EU CEPA this year for early-2027 implementation, while Luhut urges faster seaweed downstreaming with tech and processing investment. Green Energy for Industry: The environment ministry plans to link waste-based green energy from regional facilities to big industries to secure buyers and cut coal and gas dependence. ASEAN Skills Push: ASEAN DEFA progress raises the question of whether digital skills and certifications can be understood across borders. Regional Business: Johor’s opposition leader urges Indonesia to disclose companies allegedly tied to transboundary haze. Sports Tourism: Banyuwangi launched “Nggravel Glenmore,” drawing hundreds of cyclists from five countries and spotlighting local cocoa, sugarcane, rubber and coffee.

Digital Rupiah Push: Bank Indonesia says it has secured a halal fatwa for its Digital Rupiah and has started experimental cross-border transactions, but readiness still hinges on clear rules, data protection, interoperability, and consumer safeguards. Low-Carbon Aquaculture: Indonesia’s planning ministry is promoting low-carbon aquaculture to help seafood—especially tilapia—win premium export markets, with traceability and sustainable production as the new entry ticket. Tourism Trade Leads: Indonesia’s Tourism Expo Japan (TEJ) 2026 participation is projected to drive 5,600 tourist visits and US$7.17m in foreign exchange, while the ministry also invites brands to WCCE 2026 to expand global reach. El Niño and Fires: NASA imagery highlights El Niño-driven drought drying peatlands, enabling underground smoldering fires that produce heavy, hard-to-extinguish smoke. Papua Connectivity: The government is accelerating road upgrades under the IJD program, including completed Skory–Puay road works to improve mobility and local economic activity. Coal Supply Risk: A report warns Indonesia’s coal export logistics are vulnerable to super-El Niño drought as river chokepoints can disrupt barging routes.

Trade & Exports: Indonesia is pushing the fast-track I-EU CEPA deal ahead of the EU GSP expiry in 2027, aiming for market access for palm derivatives, footwear, textiles and fishery products. Food Security & Industry: Indonesia and G20 partners rejected using food as a geopolitical weapon, while the government also promotes low-carbon aquaculture and “blue food” to lift seafood exports and protein intake. Digital & Telecom: The communications ministry says some mobile data quota packages still don’t fully protect remaining balances after a Constitutional Court ruling, warning operators to improve compliance. STEM & Skills: Only about 25% of Indonesian schools offer coding and AI electives, prompting a push for teacher training and STEM expansion from primary level. Energy & Climate Risk: Super El Niño-linked drought is disrupting river shipping that coal exports depend on, raising concerns for power supply and industrial costs. Maritime & Supply Chains: Indonesia’s trade and logistics ecosystem also faces pressure from regional tensions, including a Philippines complaint about Chinese obstruction during a resupply mission near the South China Sea. Tourism & Culinary: Wonderful Indonesia Gastronomy (WIG) 2026 is set to connect chefs and industry players to global markets, positioning culinary heritage as a tourism growth engine.

STEM Push for Industry: Indonesia’s Higher Education minister urged universities to raise STEM graduate output, noting engineering, health, agriculture, math and science are only ~28% of enrollments, to better match industrial needs. Rail Safety Accountability: After the East Bekasi train crash, transport experts say the failure was collective—communication, infrastructure, and emergency procedures—not just the driver. Consumer Shift in Beauty: Cosmetics firms report shoppers are trading down and optimizing value—benefits, price, size, quality, and purchase frequency—amid tighter purchasing power. Aviation Smuggling Crackdown: Indonesian police arrested four suspects over alleged illegal import of three used turbofan engines from Singapore to Batam worth about Rp30 billion, tied to missing documents. Downstreaming Policy Continuity: Business groups want regulatory clarity as Prabowo reshuffles, creating a new downstreaming and energy transition coordination role for Bahlil. AI Data Center Race: Indonesia’s AI data center buildout is accelerating, but needs a clear resource rule book covering grid, regulation, and local capacity. Mining Planning Pressure: Coal and mining players are pushing for timely 2027 RKAB approval to avoid disruptions in production and export planning. Industrial Water Focus: A Jakarta workshop targets investable solutions for West Java’s factory-driven water pollution and supply problems, with industry and finance partners. Plastics Treaty Tension: Negotiators face a plastics treaty standoff as fossil-fuel producers resist production limits, while developing countries back broader action.

Maritime Safety & Logistics: Indonesia police named four suspects in the Sept. 13 Java Sea ferry disaster, with 80 dead, 108 survivors and 55 missing, after the Virgo Transport 8 lost contact during bad weather. Industrial Policy: The new Industry Minister Muhammad Sarmuji vowed policy continuity with fresh innovation to keep pushing downstreaming and jobs, while also calling for tighter alignment with private industry. Commodity Oversight: Danantara Sumberdaya Indonesia (DSI) started a pilot for its National Data Intelligence (NADI) platform to monitor palm oil, coal and ferroalloys exports and flag pricing or shipment discrepancies. Trade & Manufacturing: Indonesia’s exports kept momentum, with August non-oil and gas exports rising on stronger manufacturing and processing output. Food & Consumer Health: A Constitutional Court ruling backing color-coded sugar, salt and fat labels was welcomed as a step to strengthen packaged food transparency. Environment & Industry Risk: Environment regulators urged strict B3 hazardous waste compliance, warning non-compliant firms could lose operating certificates, as Indonesia targets PCB elimination by 2028. Energy & Climate: El Niño-linked wildfires are worsening for rubber growers in South Sumatra, with growers relying on traditional fire-fighting as fires spread. Indonesia–South Korea Ties: Seoul highlighted green industries and digital transformation as key pillars for deeper Indonesia-South Korea economic cooperation, including defense and security links. Infrastructure Connectivity: A consortium began construction of the 6,870 km SGI submarine cable system to connect 14 landing points across Indonesia. Food Supply: Bulog said it distributes about 4,000 tons of rice daily under the SPHP program to stabilize prices, urging faster delivery to reach retailers and villages.

Indonesia Manufacturing Pulse: S&P Global’s PMI rose to 52.4 in September, signaling expansion as new orders and exports picked up, though logistics and fuel costs kept the pace uneven. Trade & Commodities: Indonesia’s trade surplus widened in August to US$3.55bn, led by stronger manufacturing exports and commodities like CPO and coal, while coffee exports slid. Inflation Watch: September inflation climbed to 3.28% y/y, driven mainly by food prices (chilies, chicken, rice, eggs), adding pressure on Bank Indonesia. Labor Policy Risk: Apindo warned that a more rigid manpower law could raise business costs and deter investment, arguing for balanced worker protection plus job creation. Food Security Under Fire: Experts urged fire risk maps for food estates after reports showed large burned areas in agricultural zones, including Merauke food project land. Maritime & Defense: Indonesia commissioned the aircraft carrier KRI Sriwijaya-100 near the Malacca Strait, while Garuda Indonesia returned to negative equity as fuel costs surged. Energy Transition: Indonesia is pushing solar expansion toward 100 GWp, but researchers say grid and storage readiness is the key constraint. Industry Tech & Shipping: Siemens Energy will supply EST-Floattech battery systems for a hybrid commissioning vessel being built in Batam.

Cabinet & Energy Downstreaming: President Prabowo swore in a new downstreaming and energy transition setup, appointing Bahlil Lahadalia as Coordinating Minister for Downstreaming and Energy Transition while keeping his ESDM post, aiming to speed up downstream investment (with 90% of investment tied to energy and minerals). Industry Leadership Shuffle: Prabowo named Muhammad Sarmuji as Industry Minister and Arrmanatha Nasir as Foreign Minister in a major Oct 1 cabinet reshuffle, alongside police leadership changes. Maritime Safety: Indonesia arrested the captain of the Virgo Transport 8 ferry after the Java Sea capsizing that killed at least 78 people, with 57 missing. Food & Agriculture Signals: BPS reported Indonesia’s September inflation at 3.28% and projected rice output for Sep–Nov at 7.06 million tons, down nearly 12% year-on-year. Palm Oil Trade Watch: Palm oil prices fell to an 11-week low on weak exports and higher output, while India stepped up crude palm oil purchases after cutting import duties. Digital Infrastructure Friction: West Java’s governor ordered a halt to a Singapore-owned BDx data centre campus in Jatiluhur over permit and environmental assessment issues. Research for Value-Add: BRIN mapped Indonesia’s seaweed value chain to push the sector from raw materials into higher-value derivatives. Business & Media: Meta appointed Dhruv Vohra to lead its Southeast Asia commercial strategy, and Disney+ launched a subscription bundle with Indonesia’s Vidio.

Data Center Permits: West Java suspended BDx Data Centers’ 640MW AI data center in Jatiluhur, Purwakarta, citing missing environmental and building approvals, after construction began without clear permit certainty. Plastic-to-School Build: Bakti Barito Foundation broke ground on SDN 3 Sukanegla in Garut, using residual plastic waste for bricks plus floors, ceilings, pipes, and frames—turning about 15 tons of low-value plastics into two classrooms and toilet units. Net Zero Campus Push: A Jakarta dialogue on “Building an Indonesia Net Zero Campus ecosystem” brought ministries, universities, and partners to align campus sustainability with national climate goals without adding heavy compliance burdens. Private Wealth Hub: RAK ICC in the UAE is repositioning from company registry to a cross-border private wealth and structuring centre for international families and advisers. LNG Supply Chain Expansion: SK Innovation E&S started commercial production at Australia’s Barossa gas field, advancing a full LNG value chain from drilling to power generation. SME Stability Focus: Mastercard launched its Dreamonomics report and “Collection for Business,” saying SMEs increasingly prioritise stability and risk control. Indonesia Prison Scandal: Authorities began demolishing 10 “apartment” units inside Cibinong prison after an Ombudsman-led probe into preferential inmate treatment. Deepwater Exploration: Eni secured full interest in Indonesia’s Sapukala deepwater block in the Kutei Basin, targeting gas growth near major discoveries. ASEAN Digital Economy: A new outlook says ASEAN’s digital economy could reach $1T by 2030, with Indonesia as the biggest driver.

Trade & Industry Tech: Indonesia’s Trade Ministry rolled out AI services at Trade Expo Indonesia (TEI) 2026 for the first time, letting overseas buyers order AI-based products and services from Indonesian talent. Solar & Energy Security: The government said US tariffs of up to 114% on Indonesian solar panels are a chance to grow domestic demand, citing ~11 GW/year module capacity and linking it to the 100 GWp solar push. Power Grid Buildout: Indonesia is accelerating inter-island electricity links, starting with Sumatra–Java, to feed new renewables to industrial hubs and data centers in Batam/Riau. Gas Network Push: Pertagas was urged to expand the gas network to households to cut LPG imports, foreign-exchange outflows, and subsidy costs. Tax Digitalization: Indonesia’s Directorate General of Taxes said the Foreign Digital Transaction Tax Collection System (SPP TDLN) is already live (active since Sept 25) with ongoing refinements. Public Sector Accountability: Indonesia suspended five officials after a raid found luxury apartment-style facilities inside Cibinong Prison, triggering renewed scrutiny of preferential treatment in jails. Healthcare Infrastructure: Indonesia targets upgrading 66 regional public hospitals from Type D to Type C by 2027 to expand specialist services in remote areas.

Energy & Industry Policy: Indonesia will keep Pertalite and other subsidized fuels unchanged despite global oil hitting $107/bbl, while non-subsidized prices will follow a one-month market average. Logistics & Trade Tech: Flexport launched a Model Context Protocol server so freight shippers’ AI agents can track, quote, and book cargo, with customs tools and human handoff for exceptions. Digital Finance Ops: GoTyme rolled out an AWS-based AI Root Cause Analysis tool cutting incident diagnosis from 34.5 minutes to about 10 minutes. Climate & Agriculture: El Niño is delaying Indonesia’s rainy season, pushing rice planting back in many areas and raising crop stress risks. Public Health: WHO recommended the 2027 southern-hemisphere influenza vaccine composition, including H1N1, H3N2 and Victoria-lineage B. Maritime & Fisheries Infrastructure: Indonesia allocated Rp1.2T to upgrade Bali’s Pengambengan Fishing Port into a modern integrated fisheries and maritime hub. Carbon & Green Investment: Indonesia offered carbon market incentives for low-emission rice, waste-to-energy and blue carbon projects, supported by new exchange-traded carbon unit registration rules. Disaster Preparedness: Indonesia’s tourism ministry urged risk-based safety management for volcano tourism, including SOPs, evacuation planning and certified guides. Security Incident: Somali pirates’ escape during a Puntland-led rescue of the hijacked MT Honour 25 left five crew dead, including three Pakistani sailors.

Prison Oversight: Indonesia suspended five officials after an Ombudsman probe into alleged luxury “apartment-style” facilities for inmates at Cibinong Prison near Jakarta, renewing scrutiny of preferential treatment in prisons. Trade & Manufacturing: The Indonesia-EU IEU-CEPA deal is expected to cut a 10% tariff gap on Indonesia’s labor-intensive exports to Europe, helping the country compete with Vietnam—if investment realization stays fast and coordinated. Energy Investment Push: Indonesia’s updated RUPTL targets Rp2,133.7T in power-sector investment through 2034, with renewables and grid expansion leading; the government is also revising plans to support a 100 GWp solar target. Green Downstreaming Roadmap: A US$618.1B low-carbon roadmap aims to deepen EV, batteries, solar components and biofuels value chains by 2040, with up to 3 million jobs projected. Geothermal Build-Out: PLN signed infrastructure contracts to ready 2x5 MW geothermal drilling at Atadei, Lembata, supporting island power beyond diesel. Logistics Headline: Asia’s port congestion could take 7–10 months to clear as China’s record container volumes keep pressure on terminals. Food Trends Watch: A new analysis suggests Indonesian food and beverage trends peak and fade faster—recent trends last about 12 weeks—while search interest still builds at roughly the same pace. Rupiah Under Pressure: The rupiah weakened past key levels as Iran-war uncertainty lifts oil prices and raises inflation/fiscal risk concerns.

Food Security Push: Indonesia’s Agriculture Ministry earmarked about Rp 17 trillion to build an integrated livestock ecosystem, with five initial livestock zones (Lampung, East Java, South Sulawesi, West Nusa Tenggara, Gorontalo) targeted for completion in 2027, including feed factories and DOC and dairy milk production. Sugar Policy Tension: Sugarcane farmers challenged a plan to import 150,000 tonnes of raw sugar during the harvest season, arguing it will depress prices and disrupt the national sugar balance. Mining & Nature Risk: Central Halmahera’s Bokimoruru Cave faces growing threats from expanding nickel mining, raising alarms over damage to a tourism and cultural landmark. Digital Payments Expansion: IFC launched a $700m risk-sharing initiative to help banks and fintechs scale digital payments in emerging markets, aiming to expand access for small businesses and women while tackling identity and fraud risks. Halal & Social Pressure: Protests in Central Sulawesi against a pork restaurant highlight rising pressure on minority food businesses and renewed debate over intolerance. Sports & Tourism Spotlight: Malaysia held Indonesia to a goalless draw in the ASEAN Cup, while Bali connectivity coverage points travelers to eSIM options instead of local SIM hassles.

Indonesia’s Market Pulse: The Jakarta Composite Index slid to 6,147 as crude oil jumped and the rupiah weakened, while Bank Indonesia kept its benchmark rate at 5.75% citing controlled inflation and room for growth. Food & Retail Supply: Premium rice stocks at about 8,000 West Java outlets reportedly fell 50–70%, leaving some retailers with only 2–3 days of inventory. Energy & Mining Policy: Indonesia tightened coal export governance with new trade rules as exports hit $18.11B in Jan–Jul 2026, aiming to boost certainty and value beyond raw commodity sales. Forestry for Food & Energy: The Forestry Ministry earmarked 5.67 million hectares for forest business permits tied to food security, energy, non-timber products and environmental services. Livestock Push: The government is fast-tracking five integrated livestock zones (chicken, eggs, milk) across five provinces with Rp2.2T allocated, targeting completion by 2027. Digital Payments & Fraud: BI urged stakeholders to strengthen online fraud response via faster information sharing and clearer accountability, while Indonesia expands cross-border QRIS connectivity. Defense & Maritime: Indonesia’s Navy will receive 105 US-made amphibious combat vehicles by 2028, and officials said KAI has not yet submitted a formal proposal to import used Japanese KRL train sets. Industry Tech & Trade: Swissport entered Indonesia’s air cargo market via a JV with UNEX, and Grünenthal partnered with DKSH to expand pain medicine access across eight Asia-Pacific markets.